Respatialising Finance. Sarah Hall
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political, economic and social relations of money have not been widely studied within recent work economic geography. This comes despite the fact that earlier work on the geographies of money and finance draws heavily on insights from international political economy in the study of some of the key transformations in global finance such as the implications of the collapse of Bretton Woods and the associated ending of the gold standard for the international financial system (Leyshon and Thrift 1997; Leyshon and Tickell 1994; Strange 1986). Whilst economic geography research on money and finance turned its attention increasingly to financial centres and financialisation, for scholars working in an IPE tradition, a key concern remained as to how increased cross-border monetary flows prompted changes in state power within the international financial system (Cerny 2010; Cohen 2017). More recent work has explored how such power constraints are particularly acute for developing countries because of their relative inability to borrow from global financial markets (Alami 2018). However, whilst it is in IPE that the fullest engagement by social sciences with RMB internationalisation can be found, the research presented in this book points to two limitations of this literature.
First, IPE work on global monetary relations has, over the past 20 years, become increasingly focused on national monetary and financial policy concerns with less attention being paid to the processes and politics of change at the macro, international level (Cohen 2017). Whilst this provides an important analytical framework with which to understand the domestic policy context within China, which has given rise to the process of RMB internationalisation, it provides far fewer insights into how this domestic policy agenda has been rendered mobile and expanded internationally, the drivers for this outside of China and the economic and political relations between states and financial markets that have subsequently given substantive form to the process of RMB internationalisation.
Second, and following on, IPE work on money and finance, including that on RMB internationalisation, remains largely focused at the national scale and has placed particular emphasis on the potential endpoints of RMB internationalisation as found in debates concerning the ability of the RMB to challenge the US dollar as the global reserve currency. In some ways this echoes the limited geographical imaginations that have, until recently, dominated work on financialisation, which again have focused on particular scales of analysis (particularly the firm and the nation state) with much less attention being paid to other sites such as the household or the region (French et al. 2011). These foci did not provide me with the theoretical and methodological tools to examine how practices at the subnational level, namely within international financial centres such as London, become enrolled within and shape the process of RMB internationalisation. Questions therefore remained about why London’s financial sector and its policymakers and regulators were committed to becoming part of the RMB internationalisation process? What was the process that led to the mobility of RMB financial policy into London? And what can these changes tell us both about the changing nature of global finance as China seeks to become more fully involved (albeit on its own terms) and the implications of this for established international financial centres such as London.
These questions are shared with other scholars who raise concerns about whether this literature is too focused on the economic dimensions of RMB internationalisation, thereby neglecting its multifaceted and particularly its political dimensions. As Helleiner and Kirshner (2014: 2) argue:
“To date, the study of China’s increasingly important role in the international monetary system was focused primarily on economic questions and technical issues, with much less detailed attention given to the politics of China’s international monetary relations”
In response, Respatialising Finance takes the changing international political economy of global financial networks as its starting point but argues that the financial district, or what are often known as international financial centres, provide an analytically and empirically valuable concrete entry point into understanding how global finance is as much a political as it is an economic relation (see also Hall 2017). In so doing, a focus on IFCs provides a valuable corrective to nation-state centrism that dominates other disciplinary work on finance, particularly that in IPE. As a result, a key contribution of this book is to rethink the conceptual and analytical purchase afforded to us by IFCs as well as the empirical challenge of placing and understanding London’s role within RMB internationalisation in particular. In terms of work on IFCs from an IPE perspective, work has been increasingly attentive to the reciprocal interaction between domestic institutions and transnational processes (Farrell and Newman 2014) but it continues to offer very limited engagement with questions of spatiality, frequently overlooking the importance of the urban scale when thinking about global transformation.
The financial district and the financial centre are one of the central leitmotifs of geographical work on money and finance. However, and certainly more recently, this literature is characterised by an emphasis on the economic, social and cultural dimensions of money and finance. For example, as Cassis (2010) notes, the majority of work has centred on the identification of external economies of scale available to firms and financial institutions beyond their firm boundaries through being co-located with each other including: highly liquid financial markets; the development of ‘buzz’ (Storper and Venables 2004) between financiers within financial clusters that facilitated processes of innovation in the production of financial products; and the deep and dense highly skilled labour markets within financial districts (Beaverstock and Hall 2012). As a result, less has been written at the scale of the financial district or centre on the politics and power relations that shape their activities.
However, whilst questions of power and political relations have not been studied widely through work that explicitly focuses on IFCs, the same is not true of wider interdisciplinary work on contemporary changes in the international financial system, including within geography (see for example Agnew 2012). For example, there is growing interest from scholars working in a heterodox economics tradition in the ways in which currencies are tied into the international financial system in asymmetric ways such that the power of some currencies is structurally limited because of their inter-state relations with other currencies (Kaltenbrunner 2015; Kaltenbrunner and Painceira 2018).
Beyond this work, there is also a growing interest amongst economic geographers in state capitalism (Alami and Dixon 2019; Lim 2018). As Alami and Dixon (2019) make clear, whilst this work has done much to remind us of the connections between capitalism firms and the state, including in relation to the increasingly international orientation of China, it has been criticized for being eclectic and wide ranging in its focus, and as a result can lack analytical precision. In Respatialising Finance, I use work on state capitalism to remind us that state capitalist arrangements are always temporary and hence, in many ways, the analysis of London as an IFC reflects the times at which the research was undertaken – in some ways the high point in Sino-UK relations in the mid-2010s as the state capitalist relations between the UK and China have become more strained and politicized since the research in this book was completed. I also suggest that the IFC represents an important space in which state capitalism can be located and a space in which many of its logics as they relate to financial policy and practice are enacted.
Theorising Global Finance from Financial Centres
In Respatialising Finance, I build on these interventions by demonstrating the value of the site of the IFC as an analytical entry point into the economic, social and political dimensions of global finance. I do this by arguing that IFCs offer a way of developing understandings of global finance from the meso scale of the IFC that offers a sympathetic critique of the macro-scale focus of IPE. By focusing on how RMB markets were made in practice in London, I argue that using IFCs as analytical entry points into global finance provides a valuable way of examining how challenges to existing power and authority within the international financial system are developed, what the implications are of this for different types of actors within global finance, and the implications of this for continuity and change within the financial system.
I do this by drawing on work on the cultural economy of market making (in order to understand the ‘work’ and practices within IFCs that go on to make up the international financial system) and the recent renewed interest on territoriality within economic geography (in order